Proprietary Silo Systems for Life Science Product Labeling:

A Prescription for Managerial, Financial, and Reputational Disaster

A Loftware, Inc. White Paper First Quarter 2011

Christopher Piela, Director of Healthcare Solutions
Mike Rennell, Senior Vice President, Business Development

This white paper is about an evolving technology solutions concern that has penetrated only a handful of life science manufac-

turing operations. But, it may be encountered in the future by others if they are unaware of its many significant risks. From one

perspective, even when everything is going well, these solutions run counter to the global trend among the world’s best compa-

nies to standardize on a preferred suite of integrated enterprise business applications driving all operations, including product

development, manufacturing, and even labeling in a centralized way. The risks materialize when something doesn’t go well and

these solutions aggressively thwart quick corrective action procedures.

WHITE PAPER
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Silo Systems
By some, this evolving concern is called a ‘purpose designed’, ‘silo’ labeling system or a variation on that theme. Sometimes they
are benignly described as ‘integrated packaging management systems.’ They are actually life science product-oriented, single purpose silo systems
with run-of-the-mill labeling capabilities built around a proprietary, limited function Electronic Content Management system (ECM).
In all cases, by whatever name or description, they can bring a life science products manufacturing company to a standstill, or
at least, render it significantly hobbled.

Additionally, there are many supporting indicators in the public domain that silo label solutions run counter to the global trend among the world’s
best companies to standardize on a preferred suite of strategic integrated enterprise business applications driving all operations, including
product development, manufacturing, and labeling in a centralized way. There is also an increasing risk when something doesn’t go well that
these silo solutions will aggressively thwart quick corrective action procedures.

How can that possibly be true? In advance of the longer answer in subsequent sections to follow, the short answer relates to two event possibilities at
the life science product manufacturing company: something goes wrong with the product or something goes wrong with the label on the product even
if the product is flawless. Yes, as far as the Food and Drug Administration (FDA) is concerned, the label and the product on which the label sits are,
for regulatory purposes, one and the same. Bad label means bad product. It’s not hard to see why. Label mistakes lead to the accidental misuse of life
science products which can lead to serious patient injury or death.

In either event – bad product or bad label on a good or bad product – a mandated regulatory process sweeps into effect. Universally considered
arduous at best, it’s called CAPA, for Corrective and Preventative Action. Many companies commit to their own routine set of voluntary CAPA proce-
dures. But a CAPA mandated by the FDA is not voluntary. They are enforced every time and any time the FDA identifies differences or deviations from
given standards in the business or production processes or non-compliance to production validation guidelines. And, at any time whatsoever, thanks
to a regulatory requirement known as Title 21 CFR Part 11, the FDA expects the life science product manufacturer to have and gain quick access to
everything involved in the development, manufacturing and labeling of any product. To be more specific, the rule is explained this way on Wikipedia:
(http://en.wikipedia.org/wiki/Title_21_CFR_Part_11)

Practically speaking, Part 11 requires drug makers, medical device manufacturers, biotech companies, biologics developers, and other FDA-regulated
industries, with some specific exceptions, to implement controls, including audits, system validations, audit trails, electronic signatures, and documen-
tation for software and systems involved in processing electronic data that are (a) required to be maintained by the FDA predicate rules or (b) used to
demonstrate compliance to a predicate rule.

This means when and if something goes wrong, or if the FDA wants to verify 21 CFR Part 11 compliance, users of so-called purpose designed solutions
are going to be compromised by the limited framework design of these systems. That’s because silo labeling systems are dedicated to just product
labeling. When a mistake happens, identifying what went wrong, where, when, how and why so a corrective action can be taken will be like finding a
needle in a haystack, or, more accurately, a needle from among multiple haystacks. In contrast, collaborative enterprise labeling systems are tied to
existing business applications that drive all product data. This comprehensive, intelligently integrated approach scales to include the full capabilities
offered by the leading PLM and ECM solutions. The search for what went wrong, where, when, how and why is essentially available from one source:
all in one place via one familiar core and centrally integrated system where every product data point resides.

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Loftware Connector are registered trademarks of Loftware, Inc. All other marks are the property of their respective owners.
An April, 2010, feature in Today’s Medical Developments and attributed to Dassault Systèmes Enovia Corp, confirms this point.
http://www.onlinetmd.com/tmd-0510-plm-enabling-tplc.aspx Entitled PLM: Enabling the promise of TPLC, Dassault, a leader in Product Lifecycle
Management (PLM) solutions, makes the obvious connection between regulatory compliance and end-to-end and enterprise wide applications:

...some of the most successful medical device companies are supporting the FDA’s Total Product Lifecycle (TPLC) methodology... with technologies
such as Product Lifecycle Management (PLM). TPLC, implemented with a comprehensive PLM suite, enables medical device manufacturers to deliver
innovative, compliant-ready products...

Regulatory compliance is at the forefront of every product development process, especially as companies rely on international suppliers and manu-
facturing facilities. In successful companies, compliance is the outcome of an effective, proactive business strategy that uses an open, collaborative,
end-to-end PLM system for providing complete product lifecycle traceability while facilitating efficiency and productivity. With PLM enabling better
compliance, these companies can achieve strategic, competitive growth initiatives such as increased quality, more innovative products, and faster
time-to-market.

Yet, these silo solutions, due to the apparent simplicity of solving the immediate and pressing regulatory requirements, continue to be evaluated and
implemented at places most experts might not expect. For those who would assume, for example, small life science manufacturing companies are the
chief target of these systems, the opposite is true. Silo solutions can be found sprinkled within the biggest life science organizations in the world, some
in just a department, others, in multiple plants. But even just one of these systems, especially if it happens to be in your manufacturing operation, can
represent a highly restrictive and compromised ability to validate business processes across the key critical business applications that actually create
and manage the relevant data.

Simon Jacobson, research analyst for manufacturing operations at AMR Research in Boston, captures and confirms this key point, in this case using
pharmaceutical product manufacturing as a reference point and example. In an article published by PharmaManufacturing, entitled “CAPA and Root
Cause Analysis,” (http://www.pharmamanufacturing.com/articles/2006/145.html) which quotes Mr. Jacobson, they write:

In Jacobson’s view, most large pharmaceutical companies have more trouble “breaking down the silos” — in which they might have several different
CAPA processes and technologies being used in different departments and plants — to achieve a single managed view of the process... “...with the
bigger companies, there are more silos and there is a greater need for a common, systematic approach to CAPA.”

Because of these inconsistencies across sites, companies may have to chase the same complaint at multiple facilities. “This is preventing organiza-
tions from halting what could be systemic inefficiencies,” Jacobson says. In addition, he says, “The lack of an organization-wide systemic
management process prevents a company from successfully auditing their processes and taking effective preventive actions,
such as trending across multiple sites.”

And IBM, in a report entitled, “Managing corrective and preventive action (CAPA) in a life sciences environment,” offers this further validation:
(http://www.axendia.com/mro/IBM_070328_WP_CAPA_LS_TIW10321.pdf)

Probably the most common reason for disappointing results is the failure to connect and fully integrate CAPA programs with work management
strategies and solutions, and other supporting corporate-wide information systems.

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Loftware Connector are registered trademarks of Loftware, Inc. All other marks are the property of their respective owners.
In a way, an emotional vulnerability to these silo solutions may be understandable. They come wrapped in a very seductive pitch and marketing spin… espe-
cially if the decision maker’s principal occupation, or a big part of the buyer’s role, includes responsibility for life science product labeling. Especially, too, if C-
Level executives in an organization have treated product labeling as an insignificant afterthought. For an individual with life science product labeling respon-
sibilities in such an organization and who hasn’t been able to get corporate IT leadership interested in a tightly integrated enterprise-wide product labeling
priority, and one that is tied to and triggered by existing core business applications, a so-called purpose-driven solution that has the sole role of producing
labels may sound good. But here’s a more expansive set of facts that should leave anyone good and ready to run… not walk… away from these packages.

What Are They, Really?

First, a brief description of these silo systems is in order. Essentially, these solutions come from small or new organizations that are combining a
pedestrian-grade labeling capability with a gilded and proprietary Electronic Content Management System (ECM) solution that arrives devoid of
data and is resistant to an easy population of data from, and ongoing integration with, existing enterprise applications. On a couple of important
levels this doesn’t necessarily set off any bells. After all, ECM or for that matter PLM, done right, and for the right reasons, is a very good thing.
But this version isn’t a very good ECM nor PLM if for no other reason than it has a very limited use. In a way, it’s like buying a Swiss Army knife
with only one blade.

Alternatively, robust ECM/PLM solutions of long-standing and from large established companies are becoming increasingly popular and important to
leading enterprises interested in capturing everything related to product data. And, in fairness, these leading solutions are proprietary. But they come
from companies like Oracle, SAP, IBM, PTC and EMC, to name a few, who have established de facto industry standards more commonly referred to
as ECM and PLM solutions, installed on a global scale, proven over many years, and that benefit from hundreds of man-years and millions of dollars
of ongoing development investment.

The silo providers seem to feign indifference to the possibility the life science manufacturing target may already have one of these de facto industry
standard solutions as part of its core enterprise IT infrastructure. That’s because to acknowledge an existing de facto industry standard ECM/PLM
already in place would be to reveal the redundancy inherent in buying yet another of lesser market stature and technological musculature.

Next, using a positioning that is perhaps designed to exploit the difficulty some labeling professionals encounter in gaining access to enterprise IT
sources and services, the magic boxes are further touted for requiring fewer IT integration points. That’s code, no pun intended, to mean that at long last
the labeling professional can solve his or her problem without having to go begging for help. But, of course, the purpose-driven system comes empty.
Data has to be provided. And as everyone knows who has ever had a view into that process, it is fraught with risk. It is time-consuming and expensive.
It is a suction pump for data errors as a result of keeping the same data in two different places.

To further compound the difficulties in maintaining these “silo” labeling solutions, the data used by the labeling solution must be continuously
synchronized with the corporate “source of truth”, likely their Manufacturing Execution System (MES) or Enterprise Resource Planning (ERP)
system. If the databases become out of synchronization, the label system will be producing bad labels and likely trigger a product recall.
Typically, there is no warning regarding the status of the data synchronization. It is left up to the client to determine the synchronization
schedule and establish procedures to maintain this schedule.

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Loftware Connector are registered trademarks of Loftware, Inc. All other marks are the property of their respective owners.
Like most maintenance activities, they are either performed too frequently or not frequently enough. The synchronization of these databases is
typically an IT responsibility (generating data extracts and reformatting the extract to be used by the silo labeling system). In the Corporate IT world,
these activities are viewed as “non-value-added activities”, meaning in their view, the extraction of data from database “A” to re-populate database “B”
to accommodate another business application offers no additional value to the organization. As one can imagine, this added cost is not likely to be
highlighted as a benefit with these “silo” labeling solutions.

The risk associated with not frequently performing data synchronization maintenance comes in the form of generating bad labels, the triggering of a
product recall and the CAPA event initiated to correct the error.

The costs associated with the above recall event are so great that most organizations are overly cautious and over maintain their databases. This
transfers the cost to the IT function and forces them to continue expending resources on “non-value-added” activities.

Ultimately, even with data synchronization routines being performed on a continuous basis, there is no guarantee the data residing in the ERP/MES
“source of truth” is the data that is actually going on the product label. This risk can only be reduced, but never eliminated.

In realistic terms, in fact, the introduction of a silo labeling system means that yet one more system has been introduced that has to be maintained,
validated and deployed. It means people have to be trained on yet another system. And it also means that whenever anyone wants to generate a label,
they have to swivel chair away from the application and familiar graphical user interface with which they work most of the time for all other things, and
turn to a different system with a graphic user interface that is peculiar to that proprietary system and may necessitate a deviation in how a label print
is triggered.

The veneer appeal of these silo systems is they can provide a label to someone whose main interest is in getting their hands on a label, without regard
to much else. These systems are attractive on some level because they are exclusively tailor made for compliance with rules like 21 CFR Part 11 when
it comes to labels. The combination of these two factors means these products “show well” when being viewed by label-centric audiences. And, if the
FDA’s only interest in life were labels, and if 21 CFR Part 11 regulated labels only, these silos would make perfect sense. Since the FDA’s interests
span everything and anything related to life science product development, manufacturing, labeling, safety, and much more, these silos don’t make any
sense at all. Among product-centric and regulatory-centric professionals in life science manufacturing, these silos are at best an added expense and
another system burden, and what appears to be an evolving trend, an undesired rip and replace.

Imagine, for example, the May, 2010, incident involving the recall of a children’s and infant over the counter medication by a major Pharmaceutical
company after the U.S. Food and Drug Administration found deficiencies at one of the company’s major production facilities. Without speculating about
what type of IT infrastructure this firm relies upon – “if a silo system existed… “-- this is an appropriate incident to use merely to contemplate how silo
systems, in an example like this, could slow a desired outcome.

Specifically, in a report about this, The Wall Street Journal quoted the corporations Chief Financial Officer as confirming the potential cost of the incident
at somewhere between $200 and $300 million.

The reason: everything had to stop while a team figured out what went wrong, where, why, when, how, by whom – and how they are going to correct
it. Paraphrasing another major news publication describing the intensity of this period for this plant:

The company won’t resume production and shipment of the products until “corrective actions” are taken. It has enlisted the help of an independent
contractor to assist in a “comprehensive assessment” of all of its production facilities. It plans a “detailed response” to the U.S. Food and Drug Admin-
istration’s recent report about deficiencies…

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Loftware Connector are registered trademarks of Loftware, Inc. All other marks are the property of their respective owners.
The presumed deficiencies in this instance, according to the firm, seem to involve …medicines (that) may contain a higher concentration of its active
ingredient than they should, while others may contain inappropriate levels of foreign particles… What’s that got to do with labels? Probably nothing,
except for these 14 key words used by the news publication to describe what the firm is doing right now to get back in business with these recalled
products: a “comprehensive assessment” of all of its production facilities. It plans a “detailed response”…

In addition to every and all product data points this firm likely has under control in an enterprise-grade PLM solution, the review is going to include data
points about product labeling, product labeling systems, processes, methods, materials and records. In a case such as this, if the labeling data is on a
silo and if, because of that, it takes more days to gather and access the labeling data, an organization as large as this one can lose millions and mil-
lions more as the delay continues. And in this case, it is likely that labels had nothing to do directly with the cited deficiencies. Of course, any time any
deficiency is detected, the label data has much to do with recall efficiency and urgency. A silo slows the process, complicates the process, increases
the cost of the process, and delays the speed at which a major product can return to market.

Sometimes It Is the Labels

Of course, labels can be the primary source of FDA intervention, too. Examine, for instance, this massive mislabeling event dating back to November,
2008, as summarized from a report by another reputable news publication:

U.S. health officials warned doctors and patients on Wednesday that a large Medical Device Manufacturer was recalling nearly half a million single-use
syringes that could pose a serious risk to diabetics... The Food and Drug Administration said the possibly mislabeled syringes could lead to patients
receiving an insulin overdose of as much as 2.5 times the intended dose, leading to low blood sugar levels and serious health consequences, including
death... During the packaging process, some syringes labeled for use with U-40 insulin were mixed with syringes labeled for use with U-100 insulin.

When something like that happens, does anyone want to be the person who decided in favor of a proprietary labeling system silo? Wouldn’t that
person, to coin a phrase, ‘Want to get away?’

Optimizing Results by Collaborating Available Enterprise Resources and Real Standards

As noted by the experts cited in this white paper, a centralized, enterprise-class solution optimizes compliance and competitive opportunities. If, for
example, a life science manufacturing company uses one of the leading industry standard PLM solutions, integrating the labeling function with that
PLM is the most efficient and effective option. This is true of existing MES, ECM, ERP and other core business applications upon which more and more
companies are standardizing their operations on an enterprise scale.

In the not too distant past, life science manufacturers either favored, or indulged by default, an array of discrete, independent systems and sites. But
among those growing the fastest globally are companies that favor, in the words of Boston Scientific, ““a Harmonized, Cohesive, global enterprise.”
Boston Scientific is achieving this through their Product Data Management (PDM) solution which is a business function that includes Product Lifecycle
Management (PLM) and which is responsible for the creation, management and publication of all product data. At Boston Scientific, their PDM solution
integrates their Global Library of, Drawings, Documents, Procedures, Analyses, and Standards… all in one place, for use in all areas, all the time, for
everything product related.

IBM, Oracle, SAP and our Other Partners Are Big For a Reason
Next, if a company wants to take advantage of an ECM/PLM solution, but does not have one, they should get one. But, not an ECM with limited
labeling functionality only. Instead, ECM/PLM products from IBM, like FileNet for example, or PTC’s Windchill and Oracle’s Agile should be
considered.

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Loftware Connector are registered trademarks of Loftware, Inc. All other marks are the property of their respective owners.
For example, IBM FileNet (IBM FileNet: http://www-01.ibm.com/software/data/content-management/) is a robust enterprise-grade ECM solution with
extraordinary built-in capabilities for data and document control and can easily accommodate all of the necessary labeling compliance and manage-
ment requirements of any silo system and then some. IBM FileNet’s Content Manager provides full content life cycle and extensive document manage-
ment capabilities for digital content. IBM FileNet Content Manager is tightly integrated with the family of IBM FileNet products and serves as the core
content management, security management, and storage management engine for the IBM FileNet family of products.

Alternatively, PLM solutions such as PTC’s Windchill and Oracle’s Agile are examples of production-proven content and process management ap-
plications that provide a single source of product information and content to enable development efficiencies while reducing errors and rework. These
systems provide complete product definition and collaboration capabilities that drive cross-enterprise understanding of information, regardless of
source. They offer repeatable, end-to-end process support and automation that speeds time-to-market, reduces development costs and provides
secure, industry-standard internet architecture that delivers a safe, high-performing technology platform.

Isn’t the point obvious? On the one hand we have ECM solutions in single-purpose silo systems that look really good if viewed through the narrow
lens of the labeling-only world. On the other hand, we have enterprise ECM/PLM solutions with monster functionality that look excellent when viewed
through the lens of staying in business, staying in compliance, and keeping product on the shelf and that, without question, with the right connectivity
bridges, can easily handle the incremental task of product labeling. Plus, it might be noted, IBM, for example, traces its origins back to the 1880s.

These enterprise class systems also trigger events, like labeling, natively through their core business applications. Silo systems add incremental and
redundant processes. Enterprise class systems let users stay in, with, and at the same application and GUI interface all day whereas silo systems
require users to access entirely different systems and silo-specific graphical user interfaces for a special intermittent task. Core systems offer cross-
functionalities. Silos do one thing. With existing enterprise solutions, everyone is already trained and familiar with their use. Rolling in a silo means
another round of training; another system to validate, deploy and support.

A Better Idea
At Loftware, we’re pretty sure our future isn’t in the development of ECM, PLM, ERP or WMS applications. For one thing, we don’t have the audacity
to believe we could bring anything more to that effort than is already being achieved by the leaders. We know some very large companies, with whom
we partner and work, already offer the gold standard for these applications.

Alternatively, when it comes to labeling within the life science industry, which we have specialized in for more than 20 years working hand in hand
with the leading enterprise application providers, our mission has been to consistently innovate the industry’s leading intelligently integrated labeling
solutions.

That’s why today, Loftware is the foremost authority and market software leader in delivering innovative business solutions for meeting a company’s
global labeling requirements. Loftware’s Enterprise Print Lifecycle Management (EPLM) software solution suite enables organizations running Ora-
cle®, SAP® and other major ERP, SCM, ECM, PLM and WMS applications to quickly develop and deploy complex barcode label and RFID smart label
tags. Centralized high volume printing capabilities and scalability provide immediate control over global labeling operations from one instance, ensuring
that compliancy requirements and uniformity of all labeling requirements are fulfilled.

Silos? In life science product manufacturing circles receiving an unwanted “FDA Warning Letter” or “Product Recall Notice” causes significant costly
disruption to the business. Exasperating the issue by having implemented a Proprietary, Non-Integrated Labeling System Silo will surely compromise
the ability to rapidly determine what went awry and how to respond.

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Loftware Connector are registered trademarks of Loftware, Inc. All other marks are the property of their respective owners.
About the Authors

Christopher Piela draws his unique perspective and knowledge of healthcare product labeling opportunities from more than 17 years experience in
which he has worked in a wide variety of healthcare roles that span a cross section of the healthcare supply chain. His experience includes 9 years
with a major life sciences manufacturing company where he specialized in validation systems. Later for approximately four years he was with a major
provider of hospital operational services where he became immersed in the patient side of healthcare products and services. And, for more than four
years, as Loftware’s Director of Healthcare Solutions, he has established Loftware’s presence and reputation worldwide in this highly specialized verti-
cal with dozens of major, brand name healthcare products and services providers.

Michael Rennell, with over 30 years in Information Technology, brings a depth of understanding to the current evolution of convergences in infrastruc-
ture technologies and regulatory mandates. He has extensive experience in the deployment of major enterprise business solutions, coupled with signifi-
cant expertise in compliance labeling technologies. In the last 5 years he has assisted organizations worldwide to prepare for the adoption of emerging
technologies addressing requirements for IT centralization and consolidation as well as risk reduction tied to the increase in regulatory mandates.

Copyright © 2011 Loftware, Inc. All Rights Reserved. Loftware, Loftware Print Server, LPS, Loftware Label Manager, LLM and
Loftware Connector are registered trademarks of Loftware, Inc. All other marks are the property of their respective owners.